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Gran Tierra cut crude output by 5,250 b/d because of Colombian protests

Highlights

Operations in Putumayo, Magdelena River Valley to close

Ecopetrol, Frontera Energy report no material impact so far

Economists fear general slowdown as transport problems persist

Bogota, Colombia — Gran Tierra Energy, Colombia's third-largest crude producer by volume, reported late May 17 that it has had to shut in about 5,250 b/d, or 18% of its prior output levels, on operational problems caused by three weeks of social unrest and road blockades that have begun to pinch the country's oil patch.

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The Calgary-based company, with principal operations in Colombia, said in a statement that road blockades in the Putumayo Basin in the south and in the Magdalena River valley in the north have forced it to halt or reduce crude output at several wells. The company was producing 29,600 b/d prior to the protests, which began in late April.

"The company's temporary oil production reductions comprise a combination of slowdowns of some oil wells' production rates, the shut-in of some oil wells in certain fields, and the complete shut-in of certain other fields," the company said. "[Al]though these blockades are not directed at Gran Tierra, they are currently impeding the company's mobilization of supplies, food, water, fuel, and oil sales, all of which are necessary for operations."

Colombia has been convulsed by three weeks of nationwide protests, marches, and blockades of principal and minor roadways. What began as a reaction to President Ivan Duque's tax reform proposal, which has since been withdrawn, has broadened to include an alliance of environmentalists, farmers, truckers, and health care advocates.

Officials from Duque's government met May 16-17 with leaders of the National Strike Committee but no agreements were announced. Main roads leading into the capital Bogotá, and other large cities, such as Cali and Medellín, remain blocked by truckers, and confrontations between marchers and police continue. Scarcities of food and medicines have been reported in Cali and other cities.

Colombia's largest crude producer, Ecopetrol, said through a spokesman May 18 that it is dealing with some "obstacles" at oil fields in southern Colombia, but that so far road blockages have not caused any material impact. Ecopetrol recently reported its first-quarter production averaged 675,700 b/d of crude and equivalents.

"We have faced some obstacles in the south of the country due to blockades in the Putumayo zone, but the principal oil fields where the company extracts the bulk of its production are operating" normally, said an Ecopetrol official who spoke on conditions of anonymity.

Frontera Energy, which ranks second among Colombia's crude producers with 40,599 barrels of oil and equivalents pumped during its recently ended Q1, said in a May 17 statement it has had "no material impacts from recent events in Colombia" and that it was maintaining its full-year production target of 40,500-42,500 boe/d.

Toronto-based Frontera, also with principal operations in Colombia, said it will "provide the market with any updates as appropriate. The health and safety of our employees, contractors, service providers, and communities where we operate remain our number one priority."

Economists are warning, however, that the ongoing strike by protesters, especially truckers obstructing mobility, is beginning to affect all sectors of the economy that were already hard hit by the coronavirus pandemic. Consumption of a broad range of products and services, including energy, has been reduced and shutdowns of a broad range of businesses, from shopping centers to paper manufacturing plants, have been reported.

Calling on the government and protesters to engage in further dialogue, finance minister José Manuel Restrepo said last week that marches and blockades were costing the Colombian economy the equivalent of $132 million a day.